Matters Of Fact

 

Let me put in a metaphor for you -- it might help resolve the paradox. When they first built those huge space-rockets down in Florida, they had a problem of how to get them from the assembly site to the launching pad. It was like moving a skyscraper. So they thought first of building a road -- a good, thick, solid, stable road. But then they realized that the motion of the truck, combined with the enormous height of the rocket, would set the whole vast superstructure weaving around like a tall tree in a gale. So what did they do? They made the road out of a deep bed of pebbles. Of course the pebbles moved under the weight of the thing -- it was hell down there, all that grinding -- but the movement, the grinding, compensated for the motion of the rocket, and the overall system was stable and secure.

INC.: Very neat. But we're talking about human beings down there, not pebbles, or atomic particles. What about the human toll of this juggernaut? What about the steelworkers in Youngstown, Ohio?

BIRCH: Well, that's what makes this play a tragedy, or at least a continual drama, with no happy ending, and no clear-cut good guys and bad guys. But Youngstown is peanuts compared to what is coming down the road. The entrepreneurial economy has always thrived on products and instruments that saved labor, time, and money -- in a word, that put people out of work. It drove them off the farms, now it's driving them out of the factories. Until recently, though, there was more than enough room for them in the service sector -- banks, insurance companies, hospitals, etc. But now technology is taking a bead on the service sector.

And what I'm saying is that the Youngstown kind of displacement is a drop in the bucket compared to what's going to happen to white-collar employment in the not-too-distant future.

INC.: And that's not destabilizing?

BIRCH: You bet it is! But there are ways of compensating. One way might be something like a bill that's before Congress right now. It would be to set up individual training accounts, a kitty of up to $6,000 that a worker could draw on to retrain himself or herself for another job. The worker would pay in 50%, the company 50%; but it would be vested in the individual, not the job. And it would be deposited in his or her account in a bank, like an individual retirement account, so that the money would stay in the system.

You've got to have something like this, because if the pace of innovation keeps up -- as it must if we're not to fall behind like the Europeans -- then most of us are going to have to make five or six career changes in our lifetimes.

INC.: One thing worries us in all this. Going back to your entrepreneurial base again, to the winners anyway -- what does this suggest about the concentration of wealth in this country?

BIRCH: That it's largely concentrating in the subscribers to your magazine. Entrepreneurs in this country today, given the rules of the game, can acquire extraordinary wealth in a way that's just not possible anywhere else in the world. The number of millionaires is growing at a rapid rate, faster than any other income sector. And a smaller percentage of the people now control more of the wealth in the United States than they did 30 to 40 years ago. So within the United States we have a wealth-distribution problem that is going to become, I think, quite serious over time. It is already very serious between the United States and the rest of the world.

INC.: We gather that this hasn't stopped you from becoming an entrepreneur yourself. You've founded a company called Cognetics here in Cambridge. An obvious question: Did your academic research in any way help you when you decided to found your own business?

BIRCH: Oh, yes! I know what the odds are, to a certain extent. I know that I very much want to be one of those top 10% or 12% who are in the entrepreneurial class, not the income-substitution class. And knowing that, I know what I am highly vulnerable to going down -- as much as I am to going up -- and that I've got to prepare myself financially.I don't want to get all my equity wiped out on the downside, or I defeat my own purpose. We've got to start financing ourselves, or else we're in big trouble.

INC.: So your research has had a direct impact on the rate of your growth?

BIRCH: Absolutely. And the impact has sometimes been to slow it down.

INC.: Does that mean that you actually turn down opportunities that arise, or chase fewer of them?

BIRCH: Sure. It means making judgment calls. Does this opportunity fit in with where we're going, or not? If it doesn't, how far off is it? Too far, even though we need the cash flow? We want to make sure that we're building as solid a foundation as we can, so that the troughs will be higher and the peaks come sooner -- so the curve will look just a bit more like a ramp than a roller coaster.

At the same time, I've got to innovate -- so as to stay ahead of anyone who tries to enter the game. We're introducing new products and new technologies at a very high rate now, and I'm willing to slow down my profit growth over time in order to finance the research and development for those innovations with my cash flow.

INC.: Sounds like Sisyphus and his rock.

BIRCH: No, it's really a lot more fun than that -- and, we hope, a lot more rewarding.

 PREV  1 | 2 | 3 | 4 | 5 | 6